Effect of corruption on educational quantity and quality: theory and evidence

We present a model with corrupt and honest examiners, and applicants with heterogeneous innate ability in the education sector with effort and bribe modelled as substitutes. The results show that 'strong' candidates rely only upon effort; 'medium' candidates choose positive levels of bribe and effort; 'weak' candidates rely only on bribery. They also show that corruption may decrease education quality by lowering aggregate effort while increasing education quantity by increasing the aggregate chances of obtaining a degree, depending on candidates' ability and the proportion of corrupt examiners. We also find empirical support for the key predictions of the model.